Price of ice cream may keep going up, but customers keep coming back

The cost of a small ice cream cone at the Denville Dairy can be a lesson in global economics.

Demand for milk is up, due to increased imports from China. The price of butter has skyrocketed because of a drought in Russia. Sugar is up 14 percent, chocolate prices rose 9 percent and nuts are up more than 10 percent.

From cow to customer, the cost of nearly every ingredient that goes into ice cream has risen dramatically over the last year, according to the Bureau of Labor Statistics, which tracks manufacturing data for a number of major industries.

But retailers say they are eating most of those increased costs so the price of a typical small cone is only up a quarter or two.

"There’s no way you could ever pass on the total increase to the customer," said Jack Fine of the family-owned Denville Dairy, where the price of a small cone went from $3.29 to $3.49. "It’s a no-win situation."

"We don’t want to charge $10 for an ice cream cone," said Pete Freund, the manager of Cliff’s Homemade Ice Cream in Roxbury and the grandnephew of the store’s namesake. "To get some of the margins we got decades ago, we’d have to do that."

At your local ice cream stand, pricing starts with the most popular items, usually the small cone, with a nickel or so increase. Store owners say they usually make up the low price with high volume sales for those items.

It had better be worth the money, said Patrick Fine, also of the Denville Dairy and Jack Fine’s son. The store’s most expensive treat, an $8.05 banana split with hard ice cream, requires a 24-ounce bowl.

"When people see a high price, at least you’re giving them more than an ample serving so they can justify paying it," Patrick Fine said.

Despite the economic downturn, customers keep coming back for more ice cream, said Harry Balzer, chief industry analyst for the NPD Group, a consumer marketing research firm.

Ice cream is therapeutic, said Pearl Giordano, the president of Limpert Brothers, a toppings and ingredients manufacturer based in Vineland.

"It is a purchase that takes you back to a nurturing moment," she said. "It means that somebody cares about us."

And retailers are banking that as long as the treat remains relatively cheap, and price increases are modest, customers will keep wanting to relive those moments.

"Ice cream is such a tiny part of your budget that it pays to get the best," said Conrad Macina, 63, of Mount Arlington as he forked over $4 for a soft vanilla, extra-thick shake at Cliff’s Dairy Maid this week. "Whatever they ask, I pay."